ADVERTISEMENT

Global Appetite for Chinese Assets Resilient Despite Virus

Global Appetite for Chinese Assets Resilient Despite Virus

(Bloomberg) -- Global appetite for Chinese assets remained resilient despite the coronavirus disruptions and the backdrop of falling outbound investments, according to a research report.

Foreign investment into China via mergers and acquisitions totaled $9 billion in the first five months of the year, surpassing Chinese outbound M&A activity in both volume and value terms for the first time in a decade, law firm Baker McKenzie said in a report Thursday with Rhodium Group. European and U.S. multinationals have been major drivers behind this trend, according to the report.

Global Appetite for Chinese Assets Resilient Despite Virus

The growing interest was driven by investors’ confidence in the rise of China’s middle class and its growing edge in certain technology and industrial assets, the report said. Recent relaxations in foreign investment rules also motivated them to buy shares in their own joint ventures in China.

“China has relaxed a number of restrictions on foreign investment recently, while its leading position as a market in many industries makes it attractive to international companies seeking growth through acquisitions,” said Tracy Wut, Baker McKenzie’s head of M&A for Hong Kong and China.

Global Appetite for Chinese Assets Resilient Despite Virus

In contrast, Chinese demand for foreign assets declined sharply as governments around the world tightened screening of foreign investments. During the same period, Chinese outbound M&A activity collapsed compared to previous years, with new outbound deals made by Chinese firms down 71% in volume and 88% in value terms.

The fall in Chinese outbound investment was largely due to tighter domestic liquidity conditions, Beijing’s controls on outbound capital flows and an increase in trade and investment restrictions abroad, according to the report.

©2020 Bloomberg L.P.

With assistance from Bloomberg